The global tablet market is shrinking

The latest global tablet shipment numbers from Strategy Analytics show the overall market shrank by 10% in Q4 but was otherwise boringly stable.

SA reckons 48.5 million tablets were shipped in Q4 2019, a significant decline from 54.4 million in the year-ago quarter. Annual shipments fell from 173.1 million to 160,2 million, implying the rate of decline may be accelerating. Within that, however, market shares remained very stable, with Apple still way ahead of any Android or Windows vendor.

“A massive shift has taken place for Huawei to focus on the domestic Chinese market and sell older inventory in EMEA and Asia (excluding China),” said Eric Smith of SA. “This pattern will intensify until the China-US trade war reaches detente and while there have been positive signs with the Phase 1 trade deal signed last month, tariffs and US component/software supply restrictions are still in place, and will likely will be until after the November 2020 US presidential election.”

“The commercial refresh has been a disappointing period for Detachables as Windows mobile computing demand has favored thin-and-light notebooks in the premium tier,” said Chirag Upadhyay of SA. “Adding to this trouble, most Windows Detachable 2-in-1 vendors are exclusively targeting the premium tier for enterprise users to make higher profits but a crowded market prevents all vendors from growing at once, especially now that Apple is competing strongly with two iPad Pro models and an iPad Air (with keyboard) in this price tier.”

So it looks like part of the blame for the tablet market decline is the US China trade aggro, but if so why are tablets more exposed to it than smartphones, which seem to be doing fine? The advent of hybrid laptop/tablets with detatchable keyboards seems to complicate the job of classifying shipments, but we suspect the main reason for the decline is that tablets have a much longer refresh cycle than phones as newer models offer nothing more than minor spec upgrades.

Q4 2019 smartphone market: Apple bounces back as Huawei retreats

The Strategy Analytics numbers for the Q4 2019 global smartphone market are out and a couple vendors fared much better than the rest.

The overall market contracted for the second year running, but less so than in 2018, perhaps indicating a 5G-fuelled recovery. For the quarter the big success story was Apple, which reversed its declines in previous quarters and delivered its best shipment numbers for a couple of year. Similarly Xiaomi rescued its year with a massive 27% increase in smartphones out the door.

The big loser in Q4 2019 was Huawei, which saw the end of a two-year growth spurt by shipping 7% few phones than it did a year ago. How much of this down to all the hassle it’s getting from the US is unclear, but it can’t have helped. The long tail also contracted by 13% at the global smartphone market continued its consolidation towards the big six.

“Worldwide smartphone demand remains mixed for now, with sharp declines in China balanced by strong growth across India and Africa,” said Linda Sui of SA. “Full-year smartphone shipments hit 1.41 billion in 2019, dipping 1 percent from 1.43 billion in 2018, due to mild inventory build in the second half of the year. Looking ahead, US trade wars and the China coronavirus scare will be among barriers to growth for smartphones in 2020.

“Xiaomi had a great quarter in Western Europe and held steady in its biggest market India. Xiaomi is pushing hard into the 5G smartphone category and this will be a solid growth area for the vendor in 2020. Oppo is expanding hard into Western Europe, with new models like the Reno 5G, but it remains under persistent pressure from giant Huawei at home in China.”

“Apple is recovering, due to cheaper iPhone 11 pricing and healthier demand in Asia and North America,” said Neil Mawston of SA. “Samsung’s global marketshare stayed flat at 18 percent, the same level as a year ago. Samsung continues to perform relatively well across all price-bands, from the entry level to premium models such as Galaxy Note 10+ 5G.”

The chances are Apple will carry that momentum into this year and will probably experience a spike when it enters the 5G market in Q4. Demand for 5G phones seems to be exceeding expectations, so it wouldn’t be surprising to see the whole market return to growth in 2020.

 

Early 5G smartphone market all about Samsung and Huawei

Research firm Strategy Analytics has been looking at last year’s 5G smartphone shipments and found most of them were accounted for by just two vendors.

SA says there was more demand for 5G smartphones than it expected. It looks like operators jumped on the future-proofing bandwagon, even though any 5G devices they sold would probably only get a 5G connection in their own HQ, and even then only if you were actually sat on a base station. As a consequence SA says around 19 million 5G phones were shipped, with almost three quarters of those made by Samsung or Huawei.

“Global 5G smartphone shipments grew from zero in 2018 to 18.7 million units in 2019,” said Ken Hyers of SA. “Demand for 5G smartphones is higher than many expected. Fierce vendor competition in China and heavy carrier subsidies across South Korea have been the main drivers of 5G demand. Other regions, like the US and Europe, are lagging behind Asia, but we expect them to close the gap later this year.”

“Almost all Huawei’s 5G smartphones were shipped in China, where US sanctions have made relatively less impact,” said Ville-Petteri Ukonaho of SA. “Popular 5G models for Huawei include the Mate 20 X 5G and Mate 30 Pro 5G. Samsung is number two and shipped 6.7 million 5G smartphones worldwide during 2019, capturing a healthy 36 percent marketshare. Samsung’s 5G smartphone shipments are international and span a wide spread of countries, from South Korea to the UK to the United States. Popular 5G models for Samsung include the Note 10 5G and S10 5G.”

“Upcoming 5G models from Apple iPhone and other big brands mean 5G will be the hottest part of the worldwide smartphone market this year,” said Neil Mawston of SA. “However, the recent coronavirus scare is currently restricting trade in some parts of China and this may well cause a slowdown in 5G supply or demand across Asia or worldwide during the first half of 2020. Industry players should be prepared for bumpy 5G sales in some markets.”

A couple more of them piped up too, but we figure you got the message. The presumed launch of 5G iPhones will definitely take 5G hype into the mainstream and will also put pressure on operators to deliver a network and service that offers something more than 4G. These numbers largely follow the broader smartphone market, given Apple’s early absence thanks to its feeble efforts to strong-arm Qualcomm. It is interesting to see how much of a jump Huawei seems to have got in the Chinese market, however.

 

Global 5G Smartphone Shipments by Vendor (Millions of Units) 2018 2019
Huawei 0.0 6.9
Samsung 0.0 6.7
Vivo 0.0 2.0
Xiaomi 0.0 1.2
LG 0.0 0.9
Others 0.0 1.0
Total 0.0 18.7
     
Global 5G Smartphone Marketshare by Vendor (% of Total) 2018 2019
Huawei 0.0% 36.9%
Samsung 0.0% 35.8%
Vivo 0.0% 10.7%
Xiaomi 0.0% 6.4%
LG 0.0% 4.8%
Others 0.0% 5.3%
Total 0.0% 100.0%
     
Source: Strategy Analytics

US marketing lies about 5G are counter-productive

New research from Strategy Analytics has found that US consumers are so confused by 5G marketing that almost a fifth of them think they already have it.

AT&T set the tone at the start of the year with its ridiculous ‘5GE’ initiative and the marketing departments of US operators have continued to over-promise on 5G ever since, as we recently discussed. It turns out that consistently lying to your customers isn’t always rewarded with their hard-earned cash an undying loyalty.

Research firm Strategy Analytics surveyed a bunch of US consumers and, while the majority of them reckon they know a thing or two about 5G, 17% of them think they’re actively using it. The accurate proportion is closer to 0.00017%. Even more hilarious is the finding that US Apple users think they’re the 5G users, despite the company not having even entered that market yet.

“one of the biggest challenges to overcome is ensuring consumers know what they already have – and how they will benefit from 5G in the future,” said Paul Brown of SA. “Reliable connectivity and guaranteed quality are key drivers, but consumers are not prepared to pay over the odds for this technology. OEM’s must find a way to drive adoption through a demonstration of need, and by virtue of this need, fixing consumer pain-points. Brand and wow-factors alone will only go so far.”

“Outside of Apple and Samsung, the battle for 5G will largely be in the mid-tier – smartphones with a retail price of $600 and below,” said SA’s Christopher Dodge. “A wave of new entrants for 5G from China, as well as new Nokia devices, could be also be damaging to brands such as LG and Motorola, who are most at risk given their low repeat purchase intentions in the 5G era.”

SA is too polite to say it, but the clear conclusion is that, once more, US marketing departments are jumping the gun when it comes to the next generation of cellular technology. Operators are so desperate to find something that will persuade their subscribers to upgrade and bolster their beleaguered ARPUs that they’re clinging to 5G like a life raft. They all need to go on holiday, have a drink and just chill out for a bit before they ruin it for everyone.

Apple forecast to dominate the 5G smartphone market next year

A report from analyst firm Strategy Analytics reckons that then Apple launches its 5G iPhones next year it will immediately become the biggest 5G player.

Right now SA says Samsung has around 40% of the market and Huawei has another 30%. Apple hasn’t launched a 5G phone yet, thanks in part to it trying to get tough with 5G modem leader Qualcomm, before eventually capitulating. That’s all set to change when the next lot of iPhones gets launched, Which SA says will all be 5G enabled.

“It may seem counterintuitive that Apple, which currently has no 5G phones in its portfolio will be able to pass current 5G market leaders Samsung and Huawei,” said SA’s Ken Hyers. “But with three new 5G models coming next year, Apple merely needs to match its current upgrade rates for newly introduced iPhone models to take the lead next year.”

“Currently Samsung is the undisputed market leader in 5G smartphones,” said Ville-Petteri Ukonaho, of SA. “But with the two largest 5G markets in 2020, China and the USA, dominated by Huawei and Apple respectively, these two vendors are set to lead in 5G next year.”

Eventually, however, the balance will inevitably be restored at 5G modems find their way further down the Android product stack. “Despite the strong showing that is expected for Apple in 5G in 2020, in the longer term Samsung will regain the 5G crown,” said Hyers. As more markets cut over to 5G, Samsung will capture the majority of that share by virtue of its dominance of the overall smartphone market and a broader portfolio of 5G devices across more price-bands.”

“Huawei’s potential in 5G smartphone sales is currently limited by the US technology trade ban,” said Ukonaho. “Huawei is dominant in China and will likely remain so. But until the ban is lifted, prospects for Huawei in 5G smartphone sales elsewhere are limited. Regardless of its long-term prospects in terms of 5G smartphone marketshare. 2020 will be Apple’s time to grab bragging rights in 5G.”

Here’s the SA forecast chart, showing Apple quickly grabbing a 40% share of the 5G market and topping 50% by the end of the year. As Hyers indicated the forecasting is simply based on the historical uptake of new iPhones, which seems fair enough. If Apple decides some of its new iPhones are undeserving of a 5G modem then the things could look pretty different.

Global smartphone market returns to growth, driven entirely by Samsung and Huawei

Shipments in the global smartphone industry returned to growth for the first time in two years according to the latest numbers from Strategy Analytics.

A total of 366 million smartphones were shipped in Q3 2019, which is 2% up on the year-ago number. Only two vendors experienced growth themselves, however, with market leader Samsung up 8% and second-placed Huawei up 29%. Huawei has doubled its share of the global smartphone market in the past three years, largely at the expense of the long tail, with once prominent brands like Sony, HTC and Alcatel being swallowed up.

“Samsung shipped 78.2 million smartphones worldwide in Q3 2019, jumping 8 percent annually from 72.3 million units in Q3 2018,” said Neil Mawston of SA. “Samsung has lifted its global smartphone marketshare from 20 percent to 21 percent in the past year. Strong sales of the premium Galaxy Note 10 and mass-market A Series models boosted Samsung’s smartphone shipments and profit during the quarter.

“Huawei once again surprised everyone and grew its global smartphone shipments by an impressive 29 percent annually from 51.8 million during Q3 2018 to 66.7 million in Q3 2019. Huawei captured a record 18 percent global smartphone marketshare in Q3 2019, up sharply from 14 percent a year ago. Huawei surged at home in China during the quarter, as the firm sought to offset regulatory uncertainty in other major regions such as North America and Western Europe.”

That’s an understatement if we compare SA’s global numbers with Canalys’s China ones from yesterday. Canalys has Huawei’s shipments in China alone increasing by 16.5 million units, while SA has its global shipments increasing by 12.5 million. In other words Huawei shipments to everywhere except china decreased by 4 million, which is considerable.

There’s something odd about those Huawei China numbers. To suddenly grab 18 points of market share in such an incredibly competitive market stretches the limits of plausibility. But even if we assume the numbers are legit, Huawei must have made some pretty exceptional business moves to pull them off and we have to question how sustainable they are.

 

Q2 smartphones: Samsung grows, Huawei slows and Apple flows

The latest global smartphone shipment numbers reveal a return to growth for Samsung, a major reduction in growth for Huawei and transition for Apple.

As you can see from the table below, Q2 2019 marked the first quarter in which Samsung registered year-on-year smartphone shipment growth for the first time in almost two years, in an overall market that continues to contract. One of the reasons for this could be the Galaxy S10 being better received than its predecessor as well as it being the main early 5G phone.

“Samsung shipped 76.3 million smartphones worldwide in Q2 2019, jumping 7% annually from 71.5 million units in Q2 2018. Samsung has lifted its global smartphone marketshare from 20% to 22% in the past year,” said Neil Mawston of analyst firm Strategy Analytics. “Strong sales in midrange and entry segments increased Samsung’s shipments, but its profit margin declined due to fierce price competition.”

While Huawei’s smartphone shipments continued to grow, it was at a much slower rate than for the past couple of years, but that was still a considerable achievement all things considered. “Huawei captured a healthy 17 percent global smartphone marketshare in Q2 2019, up from 15 percent a year ago,” said Mawston. “Huawei surged at home in China during the quarter, as the firm sought to offset regulatory uncertainty in other major regions such as North America and Western Europe.”

Apple iPhone shipments declined for the third quarter in a row, as Apple continues to diversify in favour of services such that iPhones accounted for less than half of total Apple revenues for the first quarter ever. “Apple iPhone shipments fell 8 percent annually, making it the worst performer among the world’s big-five smartphone players,” said Woody Oh of SA. “Apple is stabilizing in China due to price adjustments and buoyant trade-ins, but other major markets such as India and Europe remain challenging for the expensive iPhone.”

The rest of the table is all about the Chinese vendors, all of whom saw flat year-on-year growth. “Oppo took fifth position with 9 percent global smartphone marketshare during the quarter, holding steady from 9 percent share a year ago,” said SA’s Lindi Sui. “Oppois expanding hard into Western Europe, with new models like the Reno 5G, but it is coming under pressure at home in China from a resurgent Huawei.” Lucky Western Europe.

Talking of Chinese vendors, Counterpoint Research has identified massive growth from a new brand called Realme, which managed to ship almost five million units, having only started a year ago. Realme seems to specialize in the sub-premium category, in common with OnePlus, which is also owned by Shenzhen-based BBK Electronics, along with Oppo, but the focus of Realme’s hard expansion seems to be India.

q2 2019 smartphones

Global smartphone shipments plunge to lowest level since 2014

The decline of the global smartphone market continues but nobody sent Huawei the memo as it raced past Apple into second place.

According to Strategy Analytics, from which we derive the majority of our smartphone numbers below, 330.4 million smartphone units were shipped in Q1 2019. This represented a year-on-year decline of 4% and marked the lowest quarterly total since Q3 2014. Among the vendors Apple was the biggest loser and was easily overtaken for second place by Huawei thanks to remarkable 50% year-on-year shipment growth.

“The global smartphone market has declined again on an annual basis, but the fall is less severe than before, and this was the industry’s best performance for three quarters,” said SA’s Linda Sui. “Global smartphone shipments are finally showing signs of stabilizing, due to relatively improved demand in major markets like China. The outlook for later this year is improving.”

“Huawei surged 50% annually and outgrew all major rivals to ship 59.1 million smartphones worldwide during Q1 2019, up from 39.3 million in Q1 2018,” said Neil Mawston of SA. “Huawei captured a record 18 percent global smartphone marketshare in Q1 2019. Huawei is closing in on Samsung and streaking ahead of Apple, due to its strong presence across China, Western Europe and Africa.”

“Apple iPhone shipped 43.1 million units to capture 13 percent global smartphone marketshare in Q1 2019, dipping from 15 percent a year ago,” said Woody Oh of SA. “Apple lost ground in China during the quarter and is struggling to make headway in price-sensitive India. However, decent price cuts in China and India during recent weeks indicate the iPhone will bounce back slightly in those two countries in the next quarter.”

While shipments might be going down the toilet, the total value of those shipments seems to be stable thanks to increasing average selling prices. “By revenue, the situation is healthier, due to higher average prices (like expensive iPhones),” said Mawston. “Global revenue today is broadly around the same level as the average quarter last year.”

smartphone shipments q1 2019

Huawei forecast to have narrow advantage in 5G RAN race

Analyst firm Strategy Analytics has taken a look at the runners and riders in the global 5G race and has Huawei ahead of its rivals by a nose.

In a report titled ‘Comparison and 2023 5G Global Market Potential for leading 5G RAN Vendors – Ericsson, Huawei and Nokia’, SA took a look at the relative competitiveness of the big three kit vendors when it comes to 5G radio access network kit and made some market share forecasts accordingly.

The long and short of it, as you can see in the first table below, is that SA reckons by 2023 Huawei will account for around a quarter of the 5G RAN market, while Ericsson and Nokia will have closer to 23%. On top of that the ‘others’, largely Samsung and ZTE, will account for almost 30% between them, which is a decent effort. Samsung seems to be doing especially well in South Korea, funnily enough.

SA 5G RAN chart

“By 2023 5G looks to be a very competitive global market as this premium technology finally achieves economies of scale that will drive down the costs per Gigabyte of throughput to make 5G an affordable technology on a global basis,” said Phil Kendall of SA. “The neck and neck battle between Huawei, Ericsson and Nokia for share of 2023’s 5G radio access should lower costs for all segments of mobile, IoT and fixed 5G applications, even as smaller new vendors find specific niches below these three.”

The report also digs down into the strengths and weaknesses of the big three vendors. Specifically it looks at five broad categories: R&D, patents, product portfolio, product performance and deployment support. The bad news for the Nordic vendors is that Huawei comes top in all five categories, only having to share that spot with the other in the case of product portfolio. It looks like Ericsson needs to start putting its hand in its pocket and Nokia wants to take on a few more engineers.

SA 5G RAN comparison

“R&D investment backed by market scale is the most crucial factor for the long term competitiveness of 5G infrastructure vendors,” said SA’s Guang Yang. “Huawei has maintained steady growth in its 5G R&D investment, which bodes well for long term advances in energy efficient, cost effective 5G technology.”

With all that in mind it’s kind of surprising SA doesn’t anticipate a bigger lead for Huawei in four years’ time. The reason, presumably, is that Huawei will be excluded from a bunch of markets thanks to all the US aggro it faces. Opinion seems to be divided about how much slack will be picked up by Chinese sales, with Huawei revealing it has yet to do any 5G deals in mainland China, but the analyst in the video below still seeing that country as a big competitive advantage for them.

 

Prepaid market is an operator blind spot – research

Some new research commissioned by mobile financial services company Juvo has concluded operators are wasting loads of cash through prepaid churn.

The research was conducted by Strategy Analytics, which is having a busy day. It took a look at eight prepaid-dominant markets: Argentina, Brazil, India, Malaysia, Mexico, the Philippines, South Africa and Thailand; and concluded that in these markets alone, operators wasted $670 million last year replacing lost prepaid subscribers.

Otherwise known as PAYG or contract-free, the prepaid market probably gets a bit overlooked in developed markets as there’s nothing operators like more than signing someone up to a nice, fat two year contract. But as well as being a big piece of the action in developed markets, it tends to dominate developing ones.

Now, on one level remarking that churn is an issue in a market with no contractual obligation involved seems like a bit of a redundant statement. Of course punters are going to shop around and exhibit minimal loyalty. But the apparent point of Juvo commissioning this study is to show there are still plenty of things that could be done to efficiently reduce this churn.

It should also be noted that Juvo, in common with all other companies, doesn’t tend to just commission surveys for a laugh. It contends that what it has to offer can help operators with this prepaid lack of stickiness and has consistently messaged on the matter of prepaid churn. But that said, the findings of this study still have independent merit.

Prepaid accounted for 71% (5.7 billion) of global mobile connections and 32% ($265 billion) in service revenues in 2018. In developing economies those numbers move strongly in the direction of prepaid, for example is accounts for 94% of connections and 80% of revenue in Africa. SA also says it’s more profitable than you might think, with EBITDA margins of 40-55% in developing markets (apart from India, where Jio has thrown a spanner in the works).

SA Juvo 1

This background is designed to set up the punchline which is, of course, churn. The second chart below shows monthly prepaid churn of 3.1-6.5% across the countries studied. This equates to 37-80% annually meaning that, on average, operators have to totally replace their prepaid subscriber base every couple of years.

SA Juvo 2

“Until now, the industry has been in the dark on the scale of the costs associated with prepaid mobile churn, and the portion of prepaid OPEX spent on reacquiring the same customers,” said Phil Kendall of SA, the author of the report. “What this research allows us to do is to confidently calculate the profit that can be unlocked when prepaid churn is reduced. Success in the highly volatile, promotion-fueled prepaid market will go to those operators who can improve customer loyalty, allowing them to make strategic choices between OPEX reduction, accelerated growth or investment in service differentiation.”

“The market opportunity here is 5.7 billion customers and over $265 billion in annual revenue,” said said Steve Polsky, CEO of Juvo. “However it is hampered by huge churn and missed opportunities. As an industry, we need to talk about prepaid, we need to change our approach and we need to put identity at its heart. Prepaid customers in emerging markets consistently churn because they are constantly told ‘no’. No you’re out of airtime. No you don’t have enough money. We have to start with ‘yes’.”

The report, called ‘Death by a thousand nos’, offers a deeper dive into the prepaid churn issue, as well as some top tips on what to do about it, and can be downloaded from the Juvo website. With a major driver of the postpaid demand – the smartphone market – in significant decline, it seems likely that prepaid will become a bigger deal for all operators. So it’s probably a good idea to start thinking about how to make the most of it.